CPQ automation in Zoho Billing: What it entails, and how it helps

Let’s begin by looking into the most common flow a sustaining organization without a CPQ automation may endure.

A deal is nearly closed. The buyer wants the core plan on a two-month billing cycle, one add-on priced per user, a one-time onboarding fee, rates in their local currency, and a discount your deal desk is yet to work on.

The sales rep instinctively goes for a spreadsheet, works out this complex combination of solutions and arrives at a price. After a few internal revisions on whether this can be offered without affecting the cash flow and if everything is deducted correctly, the quote finally goes out. The highly interested customer, after waiting for days, misses it, but nothing a few reminders couldn’t achieve. Once they give a nod, the burden falls into the finance teams’ hands. They sit and rebuild the whole proposition inside a billing system (or another spreadsheet) carefully without a minute error. And this happens across deals, making these processes even more tiresome and time consuming.

If you’ve faced these issues in your organization, you could easily detect all of the pitfalls where the deal has the potential to slip in that scenario. Those exactly are the areas CPQ automation solves for.

Moreover, this also reveals the massive potential of this process to impact revenue.

According to Cameron Marsh, Senior Analyst at Nucleus Research,“CPQ has become central to revenue strategy. Organizations that modernize are not just quoting faster, they’re protecting margins, improving deal quality, and accelerating time to cash.”

So now, the question revolves more around how tightly knit CPQ should be with the broader finance and revenue ecosystem, and how CPQ can contribute to addressing various revenue leakage causes.

This is where Zoho Billing comes in. Integrated within the strong ecosystem, it combines both CPQ and Billing in one, getting business leaders to think more about setting up profitable revenue strategies, rather than focusing on the day-to-day operational questions.

The article breaks down all of the key aspects of CPQ and how Zoho Billing provides support to completely automate the processes.

Configuration: Getting the wires right

Configuration is the foundation. Any fault or missed setups here will render the automation weak, because the processes will only be magnifying the mistakes made in the foundational stage. Here’s what the configuration module entails.

The product catalogue

The product catalogue may comprise plans, services, products, add-ons depending on the business offerings.

Plans are the absolute base fragments of any sale made. Price is the first thing that comes to mind when setting one up, but a plan carries a lot more than its price tag:

• The pricing model it follows.

• A setup fee or a free trial, if either applies.

• Whether it’s taxable.

• Which account the money lands in.

• The billing cycle and frequency, if it’s a subscription plan.

To set up a clear path for a sales rep, all of these need to be taken care of at the initial stage.

Add-ons and one-time items: Few enterprise deals stop at the base plan. Add-ons needs to be fitted against a product and can be recurring or one-time, with their own pricing interval and tax treatment, so a per-user add-on can ride on the back of a plan profitably. One-time items cover goods, implementation fees, hardware, and customization work, configured as goods or services with their separate rate and account.

Having these three maintained in a single system without weaving the tools together, lets you keep a mixed deal on a single quote down the line. For large enterprises, the value depends upon deeper customization within all these base features.

Guided selling configuration

Guided selling covers a lot of ground in CPQ, but the part that shows its value most directly in revenue is also the most mechanical: which add-ons can go with which plan, and in what quantities. With both in a self-serve model as well as a sales-first model, there comes a need to associate various add-ons with various plans. And some have a minimum required quantity, some have a maximum, and that varies across plans.

What a seller, (or a customer) can attach is already bounded by what’s valid. The huge operational gain is when there are new reps and new partners, and also during high deals. In the first two cases, the learning curve is almost nonexistent as the system takes care of it, leaving no room for mistakes, while the latter is a scale problem that commonly gets addressed by a well set automation.

The operational gain here is centered around new reps and partner channels. The configuration already knows the “do’s and don’ts” of the combinations, and the invalid ones never even get a chance to surface.

Subscription model configurations

A one-time sale is done the moment the customer signs, but a subscription is only getting started at that point. The billing frequency, the renewal term, the trial and what happens once it converts, and the setup fee along with when it gets charged are all agreed on the sales call, and they serve as the “billing instruction” as long as the customer’s with you. By the time the quote with all of these terms converts into a subscription, finance has very little left to interpret and things just move automatically.

How Zoho Billing helps with Configuration in CPQ

Systems like Zoho Billing let you define all of the necessary plan configurations mentioned before along with facilitating add-on associations. This allows the same catalog to cater to both self-serve and sales-first motions. Additionally, it also takes care of:

• Quantity restrictions that follow a pattern. Seats or licenses that can only be bought in multiples of 5 or 10, rather than any number a rep types in.

• The billing frequency, the billing cycle (auto-renew or a set number of cycles), the free trial and the setup fee for subscription-based models.

• Cloning; when you want to run an experiment, you shouldn’t have to rebuild a plan carrying the same configuration from scratch, only the fields you test can be edited.

That last one does more for data hygiene than it gets credit for. When a catalog grows past a few dozen variants, the risk lies in forgetting the tax preference or changing the accounts the money should land in.

Zoho Billing’s pricing widgets let you take a configured plan and showcase them in price tables in your website without needing an additional setup. Similarly, a hosted payment page can be made visible through a URL, a QR code, an embedded iframe, or an HTML button, making it easy to streamline sales. Of course, the ease doesn’t end with hosting. It reduces hand-offs and the need for integration, which in turn reduces sync fails and delays.

Pricing: Where margin is protected or leaked

Models

Your business may have offerings priced differently for various reasons. CPQ systems makes managing them much easier. You may leverage volume-based pricing, which rewards the larger customers with a lower rate as the quantity climbs, and some tier-based models try to earn more as usage grows.

Creating a quote for such models—especially when add-ons are involved—may require numerous formulae set in sheets. With a proper CPQ system setup, tier calculations, volume calculations, or a hybrid model that combines a per-seat base with usage on top can be configured once, so that quoting them takes no more effort than quoting a flat fee. Everything downstream gets clearer from there, such as the invoice and the subsequent billing in recurring cases.

Regional variations

The widely referred BigMac Index makes one thing clear: Businesses cannot price a service the same across the globe. Purchase power parity, buying behavior, seasonal promotions, and local competitors constantly push and pull the needle. All of these are taken into account for pricing variations when businesses enter new markets.

Even if a business just goes for the direct exchange value of their home market pricing, the correct application of exchange rates and local taxes should be taken care of operationally. And when new regions get new team members, it’s important that the context transfers without any bottlenecks.

Promotional discount coupons

A discount, while driving more sales, can also affect the margins if mishandled. Operationally, there are a few nuances. For example, for large quotes, sales reps may decide that a discount could close the deal. But they may end up at crossroads to give one as they may not have the authority to do immediately.

Limitation handling is the core nature of coupons—time limitation (expiry), usage limits, which products, who’s eligible, and which region—are all variables that become impossible to handle manually at scale.

How Zoho Billing helps with managing pricing in CPQ

Zoho Billing covers most pricing models that are popularly used in today’s market. Starting from flat, per unit, volume, tier, and package, it spans to usage-based models with prepaid/postpaid facilities. And various combinations of these can be built without restrictions paving the way for hybrid models.

For global businesses, Zoho Billing provides “Price lists” with support for “exchange rates” and “tax automation”. Under price lists, you can create a price for each item/product/service in a given currency, and apply a percentage markup or markdown across each item or in bulk. So when a quote needs to be raised, your sales reps can just move forward without having to do layers of calculations.

For coupons, they take care of the basics like coupon code generation and expiry date, as well as offer advanced controls to limit usage, select regions, and set customer eligibility. This ensures that even when sales reps are in doubt whether the coupon is associated with certain services, they’ll be assisted with the system restrictions.

Quoting: The culmination point of a well-set CPQ

All of the configurations set so far were to arrive at this quote with ease. Without a CPQ system, all of these (configuration and pricing) processes are disconnected, and when the quote has to be raised, multiple references have to be pulled up.

This is the point where the customer also experiences a well-configured CPQ system in the form of a clear quote where they don’t have to raise complaints like, “This isn’t what we discussed earlier.”

What goes in the quote

Products, plans, quantities, and rates are pulled from the catalog rather than typed, which removes the usual suspects behind a bad quote: an old plan name, a stale rate, a price list from the wrong region. In specific “subscription” cases, customers may need recurring quotes every time a subscription renews. Beyond these, a few fields carry more weight than they appear to:

• Location and tax treatment: The location decides the source of supply, and the tax inclusive or exclusive setting decides how the total reads to the buyer, so tax is right at first draft rather than corrected in the second.

• Expiry date: A quote with no expiry invites a customer to return in six months and accept a price you revised in the meantime.

• Terms and conditions, and attachments: Contracts, specification sheets, and the commercial terms travel with the quote, so the buyer accepts one complete package.

Approvals that match the deal size

Think back to the scenario at the start of this article, where the quote went through “a few internal revisions” on whether it could be offered without hurting cash flow. Approval rules with criteria simplify that and prioritize what needs attention amongst the noise. The outcome enterprises are after here is proportionality. Small renewals shouldn’t wait for days in a VP’s inbox, and a million-dollar deal with a 30% discount shouldn’t slip through. Each needs a custom flow that takes it to the table it belongs.

Lastly, the quote gets the customer approval. With a CPQ tool, the approval happens via portals instead of having to chase them in email threads.

How Zoho Billing helps with the quoting process in CPQ 

Zoho Billing provides support for both one-time and subscription quotes with tax treatment, price list, and other key information handled. As for approvals, you define the condition, such as a quote total at or above a value you set, and decide what follows.

• Route it to a named approver or a dynamic approver based on deal owners.

• Add further levels when the deal calls for more eyes.

• Let it auto-approve.

While CPQ technically ends with the final approval of the quote from both parties, the perks extend. Once the customer accepts the quote, the conversion to invoice should automatically happen, translating every agreed value into the billing system. You can invoice the entire amount, invoice a custom amount or percentage with the remaining balance tracked automatically, or set a custom amount per line item. And this is also the place where CPQ and billing being together can pay off well.

Zoho Billing: Where CPQ and Billing function together  

The real return isn’t just faster and cleaner quote generation, though that happens. It’s that the agreement the customer signed and the invoice you raise are the same object, built once and carried forward. In recurring cycles, the return compounds even more as the terms for every cycle are handled automatically as translated from the CPQ setup. To see how quoting, pricing, and recurring billing function in one place, explore Zoho Billing or talk to our team about your current setup.